NCR Envelope-Free ATMs Take Hold at Large Banks

U.S. banks are showing increased interest in automated teller machines with imaging capabilities, according to NCR Corp.

The Dayton, Ohio, company announced this month that it has shipped 10,000 of its so-called envelope-free ATMs to U.S. financial companies to date, and said that banks are rapidly shifting away from traditional ATMs that require users to make deposits in envelopes.

"The days of licking envelopes at the ATM are soon over," Michael O'Laughlin, an NCR vice president and the general manager of its financial services solutions unit, said in a press release.

Retail Banking Research Ltd. in London said ATMs that accept envelopes could be all but gone from mainstream banking by 2019.

NCR, Wincor Nixdorf AG and Diebold Inc. are the top providers of envelope-free ATMs to U.S. banks; neither Diebold nor Wincor Nixdorf has released sales figures, however.

The potential market is huge. Bill Nuti, NCR's chairman and chief executive, has said that U.S. banks own 150,000 to 175,000 ATMs could be replaced by envelope-free machines.

Envelope-free ATMs let customers insert cash and checks directly into the deposit slots; the machines count the cash and display the result on their monitors for customers to verify. The scanning systems create digital images of checks, which are displayed on the screens and printed on receipts.

Brian Pilla, NCR's director of financial marketing for North America, said these features help persuade people that envelope-free ATMs are safe. At some sites with envelope-free ATMs, deposits now account for 10% to 15% of total transactions, up from 7% to 10% on the machines that were in place five years before, he said.

JPMorgan Chase & Co. is converting its fleet to envelope-free ATMs, and Tom Kelly, a spokesman for the New York banking company, said initial tests of the technology found that deposits grew 50% over standard ATMs.

Banks want to increase ATM deposits because it frees up tellers to handle more complicated transactions. Envelope-free ATMs also cut the expense of stocking branches with envelopes, and the machines offer environmental benefits. "We're much greener now, and the area around the ATMs is much cleaner," Kelly said.

NCR first deployed envelope-free ATMs in 1998 with its Personas line, and the company said interest has risen sharply since it introduced its SelfServ line in January 2008.

Gil Luria, an analyst at Wedbush Morgan Securities in Los Angeles, said the machines offer significant cost savings. "Envelope-free ATMs save banks $1.50 to $2 per transaction because bank employees do not have to open envelopes, they don't have to scan checks, and there are fewer armored-car pickups," he says.

Chase's Kelly agreed. "We don't have to service our intelligent-deposit ATMs as often," he said. "Instead of every day, we can service them two or three days each week."

So far intelligent-deposit ATMs have appealed primarily to the nation's largest financial companies. JPMorgan Chase, Bank of America Corp. and Wells Fargo & Co. are all installing the machines. Large credit unions, such as BECU in Tukwila, Wash., also are deploying the machines.

Regional banks, however, are showing only limited interest, Luria said. "By and large, they are dipping their toes in the water with a few pilot" tests, he said.